Our goal is to serve as a leading-edge resource for companies navigating the rapidly evolving landscapes of the domestic and global energy markets. Moore & Van Allen’s EIB Energy Highlights is a complement to our Energy Interdependency Blog’s in-depth individual treatment of critical issues emerging in energy policy, regulation, and related litigation. EIB Energy Highlights hits the highlights of recent energy developments, streamlining access to critical information for our readers. Subscribe to the Energy Interdependency Blog via email or RSS to ensure that you receive EIB Energy Highlights, as well as our comprehensive posts. Please contact us if you have any questions regarding the materials covered.

Natural Gas

• • U.S. Liquefied Natural Gas (LNG) Exports to Northwestern Europe Symbolic: In recent years, the concerns of many European countries dependent upon Russia to provide access to critical energy resources have intensified. The first exports of U.S. LNG to Northwestern Europe arrived in the Netherlands and Poland in early June, symbolizing the potential of a new balance in European energy supply. For the countries “in Russia’s shadow,” U.S. LNG provides the opportunity to diversify their energy resources and reduce Russia’s ability to leverage access to energy in political struggles with surrounding countries. The U.S. is expected to become the world’s third-largest LNG supplier by 2020.
  • DOE Authorizes Additional U.S. LNG Exports: The Department of Energy (DOE) recently announced the authorization of additional LNG exports from the Lake Charles facility in Louisiana. Lake Charles previously received authorization to export up to 2 Bcf/day to countries with which the U.S. has free trade agreements (FTA countries) and non-FTA countries. This new authorization allows an additional 0.33 Bcf/day of exports to FTA and non-FTA countries. As such, Lake Charles currently is authorized to export a combined total volume of 2.33 Bcf/d to FTA and non-FTA countries. The DOE also recently authorized LNG exports to non-FTA countries from the Delfin floating facility in the Gulf of Mexico offshore of Louisiana on June 1, 2017. According to the DOE, a total of 21.33 Bcf/d of U.S. natural gas exports to any country in the world have been authorized to date. A summary of the status of U.S. LNG export applications as of June 30 is available here.
  • FERC Issues Final Environmental Impact Statement for Atlantic Coast Pipeline: On July 21, 2017, the Federal Energy Regulatory Commission (FERC) issued its final environmental impact statement (FEIS) for the Atlantic Coast Pipeline (ACP) project, which will transport up to 1.5 billion cubic feet per day of natural gas to Virginia and North Carolina. The FEIS found that the ACP would have adverse impacts on waterbodies, some vegetation, and several endangered species, most if not all of which could be reduced to less than significant levels with avoidance/minimization/mitigation efforts.

Oil

• • Shift in Energy Trade with Mexico Drives Additional Cross-Border Pipeline Authorizations: On June 29, 2017, the State Department announced the issuance of three Presidential permits for pipelines to transport petroleum products cross-border into Mexico. One permit authorizes a new pipeline and the others authorize the expansion of products transported into Mexico by two pipelines owned by NuStar Logistics. These pipeline authorizations are reflective of a recent shift in the balance of energy trade between the U.S. and Mexico. The Energy Information Administration (EIA) reports that between 2006 – 2010 U.S. energy imports from Mexico were double to triple U.S. energy exports to Mexico, whereas last year U.S. energy exports to Mexico far outpaced U.S. imports from Mexico – $20.2 billion vs. $8.7 billion. Congress currently is considering modifying the process for approval of cross-border energy infrastructure projects. Congress has not issued required procedures for permitting cross-border energy infrastructure. H.R. 2883: Promoting Cross-Border Energy Infrastructure Act would replace the Presidential Permit process, established through Executive Order, with a Congressionally mandated process to authorize cross-border facilities into Mexico and Canada for the import/export of oil and natural gas and electricity transmission. H.R. 2883 was sent by Committee to the full House for consideration on June 28, 2017 and was passed by the full House on July 19^th. It has been sent to the Senate for consideration.

• • Federal Courts Do Not Have Authority to Enforce EPA’s Duty to Evaluate the Impact of Clean Air Act Regulations on Employment: The Clean Air Act (CAA) requires the Environmental Protection Agency (EPA) to “conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the [CAA],” including in particular, threatened plant closures or reductions in employment. The Fourth Circuit Court of Appeals recently held in Murray Energy Corp. v. Admin. of EPA, Nos. 16-2432, 17-1093, 17-1170 (4th Cir. June 29, 2017) that this CAA requirement does not create a non-discretionary duty that is subject to judicial oversight. The Fourth Circuit reasoned that, while CAA § 304(a)(2) permits anyone to sue the EPA administrator “where there is alleged a failure of the Administrator to perform any act or duty under [the CAA] which is not discretionary with the Administrator,” the statute’s requirement for continuous evaluation without the imposition of guidelines, timelines, or required procedures gives the EPA “considerable discretion” to manage that duty. Accordingly, the court found that there is no discrete duty that is reviewable by the courts under § 304(a)(2).
  • FERC’s Approval of PJM Capacity Market Rule Modifications Rendering Energy Market Rules Unjust and Unreasonable OK: Can the Federal Energy Regulatory Commission (FERC) approve modifications to capacity market rules if those modifications will render the existing energy market rules unjust and unreasonable? The D.C. Circuit Court of Appeals agreed with FERC’s position that the agency may approve capacity market changes and simultaneously adjust the energy market rules that are implicated to ensure they remain just and reasonable. In Advanced Energy Management Alliance v. FERC, No. 16-1234 (D.C. Cir. June 20, 2017), PJM sought to modify its capacity market rules to enhance the enforcement mechanisms in place to ensure that participants who committed to provide capacity followed through on those commitments when electricity was needed. In conjunction with PJM’s petition to revise the capacity market rules, PJM petitioned FERC to modify several energy market rules that would be rendered unjust and unreasonable with the approval of the requested capacity market changes. FERC simultaneously approved the capacity market changes and modifications to the energy market rules. Objections were raised to the substance of the capacity market changes themselves, as well as to the fact that FERC approved the capacity market changes even though they made energy market rules unjust and unreasonable. Objectors argued the “PJM had created the factual premise and legal basis for FERC to order a change in rates that PJM could not have unilaterally made,” and the “bootstrapping of results” violated the Federal Power Act (FPA). The D.C. Circuit deferred to FERC’s judgment in upholding the approved capacity market changes and in finding that FERC did not run afoul the FPA by simultaneously approving the changes to both markets.

U.S. Dept. of the Interior

• • Comments Sought on New Offshore Oil and Gas Leasing Program – North Carolina Says No to Seismic Testing: On July 3, 2017, the Bureau of Ocean Energy Management published in the Federal Register a request for information and comments on the development of a new national program for offshore oil and gas leasing on the outer continental shelf (OCS). When completed, this new 5-year program for 2019-2024 will replace the National OCS Program for 2017-2022, which was approved on January 17, 2017 under the previous administration. The 45-day comment period will end August 17, 2017. On July 20^th, North Carolina Governor Cooper announced that the state would be submitting official comments opposing seismic testing for offshore oil drilling off the coast of North Carolina in a related regulatory proceeding. “[N]ot off our coast” was Governor Cooper’s declaration.

Federal Energy Regulatory Commission

• • President Trump Selects New FERC Chairman, Kevin J. McIntyre: On July 14, 2017, President Trump announced his intention to appoint Kevin J. McIntyre to serve on the Federal Energy Regulatory Commission (FERC) as the new Chairman. McIntyre will fill the void left by former chairman Norman Bay, who resigned effective February 2017. The President also announced his intent to nominate Richard Glick to the Commission at the end of June. FERC has been without a quorum of Commission members since February of this year. These final two nominees would restore the agency’s full slate of Commission members. The President’s first two nominees, Chatterjee and Powelson, were advanced by the Senate Committee on Energy and Natural Resources in early June and await full Senate confirmation.

In our dynamic global energy market, data is king and leading-edge information is a critical input for the development of sound policy and business strategies. We highlight several resources that recently have been made available and reflect up-to-date insight into industry data and market fluctuations:

Federal Energy Regulatory Commission (FERC)

• • 2017 Summer Energy Market and Reliability Assessment: On June 15, 2017, FERC released its 2017 Summer Energy Market and Reliability Assessment report, presented by the agency’s Office of Electric Reliability and the Office of Enforcement. The North American Electric Reliability Corporation (NERC) anticipates that there will be sufficient power to meet the reference margin levels in most areas assessed, with both total load and generating capacity forecasted to be up about 1 % from last year. Solar and wind capacity are expected to exceed last year’s levels and to constitute most of the capacity additions for the summer. Natural gas prices currently exceed that of coal and are expected to exceed those from last summer. FERC reports that the $5 billion+ of infrastructure upgrades that became operational in the six RTO/ISO markets since last summer may alleviate some grid congestion and the corresponding price volatility this summer.

Energy Information Administration (EIA)

• • U.S. Natural Gas Imports & Exports Report: On June 29, 2017, the EIA released its U.S. Natural Gas Imports & Exports 2016 report analyzing the state of U.S. natural gas production, imports, and exports. In 2015, the U.S. reached record levels of natural gas production, which were largely sustained through 2016 with only a 2% reduction. With U.S. natural gas production levels nearly 40% above a decade ago, 2016 natural gas net imports hit a record low and natural gas exports last year were more than triple those of a decade ago. Record U.S. natural gas production is expected to propel the country to the status of a net exporter of natural gas in 2018.